EMERGING MARKETS-Indonesian rupiah falls to record low as stronger dollar, political risks weigh

By Reuters News

By Roshan Thomas and Nichiket Sunil

- Indonesia's rupiah slid to a record low on Thursday as the US dollar firmed and concerns renewed over the country's emerging-market status after MSCI removed a local firm from its indexes.

The rupiah , one of Asia's worst-performing currencies this year, weakened to a new low of 18,225 per dollar after stronger-than-expected US inflation data bolstered expectations of a Federal Reserve rate hike next month and lifted the greenback.

Investors were also assessing MSCI's decision to remove an Indonesian company from its indexes, the latest setback after the index provider warned last month that it could reclassify Indonesia as a standalone market due to persistent investability concerns.

The warning has added to a growing list of challenges for Indonesian markets, including policy uncertainty and sovereign rating downgrade risks.

Political uncertainty has also intensified since Vice President Gibran Rakabuming Raka's resignation, raising the risk of a split within the ruling coalition in Southeast Asia's largest economy.

Such a fracture could complicate policymaking for an administration already facing scrutiny over flagship initiatives, including its free school meals programme, and broader concerns about economic management.

"It's clear that the rupiah faces a double squeeze: higher US yields erode its carry appeal, while political uncertainty raises the premium investors demand to hold Indonesian assets," said Glenn Yin, director of research at ACCM.

Jakarta stocks .JKSE nevertheless rose 1%. Sentiment was firmer in North Asia, with technology-heavy South Korean .KS11 and Taiwan .TWII markets rising 1.3% and 0.4%, respectively.

Investors looked past a leadership crisis at Nvidia NVDA.O as CoreWeave's CRWV.O strong outlook, alongside robust growth at OpenAI and strong demand for Anthropic PBC's IPO, reinforced optimism around the AI sector.

Among other Asian currencies, the Philippine peso was down 0.5%, while the Thai baht and the Malaysian ringgit weakened 0.4% and 0.2%, respectively.



HIGHLIGHTS:

** Indonesian 10-year benchmark yields at 7.551%

** Nvidia board meets to decide CEO Huang's future as leadership crisis deepens



Asia stock indexes and currencies at 0238 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

+0.03

-1.93

.N225

0.80

22.64

China

+0.11

+4.80

.SSEC

0.44

-6.85

India

+0.00

-4.08

.NSEI

0.00

-3.35

Indonesia

-0.44

-8.51

.JKSE

0.96

-40.28

Malaysia

-0.20

-0.54

.KLSE

-0.52

-5.55

Philippines

-0.45

-7.43

.PSI

-0.97

-6.85

S.Korea

+0.27

+7.83

.KS11

1.31

29.22

Singapore

-0.07

+0.05

.STI

0.07

13.93

Taiwan

-0.12

-4.44

.TWII

0.43

53.46

Thailand

-0.40

-6.93

.SETI

-

-


Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.